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How Odisha manages mineral earnings?


Odisha has commendably enhanced human wellbeing with robust mineral resource governance. This without exaggeration, could be an ‘exemplary practice” in deftly channelizing natural resource endowments into purpose-led economic growth and human well-being. Since 2015 the mining revenue of the state has quantum jumped from five thousand crores to over fifty thousand crores which includes both from the major and minor minerals. Tenfold swell in less than ten years. Surging mining income has respite fully reduced the dependence on borrowings to fund expenditure. The outstanding public debt in 2023-24 is estimated to be 13.1% of GSDP, substantially lower than 19.2% of 2019-20. This is chiefly due to rising non-tax revenue due to mining. We know that an increase in public social sector spending will reduce the MPI (Multidimensional Poverty Index). Social capital in the mining communities is showing signs of positive improvement in the last couple of years. The district collectorates, the mining companies, civil society organizations like FIDR, CIRTD are working with the people to develop cohesive social networks, positive interpersonal relations, shared sense of identity and trust within themselves. This will contribute to cut down multidimensional poverty in the communities in the coming two-three years, which in turn will boost momentum for meeting the SDG-2030 agenda. The state has deftly tapped into the alternative means of financing through mining revenue. Stable governance and steady focus on the ground level implementation have emerged the cornerstones, unprecedently. There is growing awareness of the rights and access to land ownership certificates under the Forest Rights Act, which is good news. Odisha is the first state in the country to allocate an exclusive budget for the implementation of the Forest Rights Act of 2006. In 2023-24, twenty-six crores has been budgeted for the implementation of FRA.
Odisha’s contribution to the nation’s energy transition would be more important than perhaps what we assume now. In 2020-21, Odisha produced the second highest coal of over 154 million tonnes in the country. However, it is the first state to have climate financing since 2020-21. Ever since, the budget provisions, more than 250 Cr for groundwater recharge and solar micro-irrigation with a focus on tribal areas of Odisha which are the state’s blessings. There is something like a Green Climate Fund in Odisha (about $34 million).
Extraction industry has been berated for its supposedly contumacious conduct and viewed suspiciously for its perceived limitless avarice, aggression and anti-nature maraud. But astute governance of the mining sector and legitimization of its economic benefits by the state has palpably reduced the gap between people, nature and profit from nature. The state is boldly and appreciably trying to leverage the benefits accruing out of the much-maligned industry to boost the state social, political and economic equity. The supernormal profits from the soil of Odisha are being funneled to enrich the same soil. A lot more action is desired and are in the pipeline from what I gather. Active role of the civil society in monitoring the development is wanting.
The state today is a major industrial destination in the country and in the South Asia Region because of the natural resource abundance, peaceful, undisruptive work culture and responsive governance. Proposed investments in Odisha are north of twelve lakh crores with the desired direct impact of creating over seven lakh jobs. This is not limited only to extractive industry. However, the foundational investment to help attract large ticket, cross sectoral outlays, has been seeded by the mineral industry.
The centre and the state have set up institutional mechanisms to bank and systematically utilize the huge proceeds from mineral earnings. DMF (District Mineral Fund), CAMPA fund (Compensatory Afforestation Fund Management and Planning Authority), OMBADC fund (Odisha Mineral Bearing Areas Development Corporation) are the bespoke structures which provide the extra budgetary funds to supplement the regular state budget. The state, about six years ago effected a low key but high impact administrative reforms in rechristening the state planning and coordination department as the planning and convergence department. With thrust in convergence, the additional funds from mining could be incorporated into the welfare programs of the people in the mining areas, majority belonging to SC/ST populations. The different verticals leveraged the available extra funds to improve the doorstep delivery of developmental interventions.
Since the last five years OMBADC has garnered funds reserve of twenty thousand four hundred and seventy-three crores out of which seventeen thousand nine hundred five crores has been allocated to fifty five developmental projects including health, water, education, livelihoods, for the communities covering six mining districts entirely (Sundergarh, Keonjhar, Jajpur, Mayurbhanj, Deogarh) and two blocks in two districts (Pallahada in Angul district and Kankahada in Dhenkanal district) partially. The work impacts over nine million lives. Former Supreme Court Judge and Oversight Authority of OMBADC Justice Ananga Kumar Patnaik is quite hands-on and he is convinced that the public welfare projects are transforming the lives of the rural and tribal population of the districts. “The economic independence is tangible”, he says. I do foresee the project(s) impacting positively the overall performance of Odisha in timely achievement of the SDGs.
Such is the support of the mining cash that about three years ago the state government borrowed twelve thousand crores from the funds to meet the capital expenditure of the state. The funds contribute about ten percent of the total programme budget for specific scheduled areas (tribal areas) of the state. In eight mineral bearing districts twenty percent and more of the drinking water supply budget is met from the two funds. But DMF (about twenty-two thousand crores collected and twelve thousand crores spent) should not be diverted to non-priority or non-mining community related interventions. There have been mega scale projects in sports and airport development, recently funded by DMF. CAMPA funds utilised by the state is the highest in the country at two thousand crores but this about thirty odd percent of the funds received by the State.
Odisha is a treasure trove and a haven for mineral based industries for manufacture of Steel, Ferro-alloys, Cement, Alumina/ Aluminum, Refractories, Thermal Power and Rare Earth industries. Rare earth elements are critical enablers of technologies in clean energy initiatives (green hydrogen/EVs) worldwide, as well as the all-pervasive gadgetry and electronics in our lives. The coastal sands of Ganjam, Puri are rich with rare earth deposits. Scientists confirm that large quantity of rare earth elements can be recovered from aluminum extraction byproduct, plentiful in Odisha. Artisanal and Small-scale Mining (ASM) is active in Subarnapur, Boudh, Angul districts. The coexistence of mining, farming and business generates sustainable family income. In such areas mining substantially supplements, more than 35%, farming, business and education.
My future reading for extractive industry underlines unique opportunities for Odisha to advance economic development along with human well-being. But my worry is the ‘enclave’ nature of the extractive industry, cursorily linked to the local community & economy. However, the onus is on me, the civil society, to detach development from tokenism.

(Charudutta is an acclaimed author and a public intellectual. He can be reached at charu.panigrahi@gmail.com)


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